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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 12, 1999
COHO ENERGY, INC.
(Exact name of registrant
as specified in its charter)
TEXAS 0-22576 75-2488635
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
14785 PRESTON ROAD, SUITE 860,
DALLAS, TEXAS 75240
(Address of principal executive offices)
Registrant's telephone number, including area code: (972) 774-8300
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ITEM 5. OTHER EVENTS.
STOCK PURCHASE AGREEMENT. On August 21, 1998, HM4 Coho L.P., a Texas
limited partnership (the "Purchaser"), and Coho Energy, Inc., a Texas
corporation (the "Company"), entered into an agreement (the "Original
Agreement") providing for the issuance of up to 41,666,666 shares of the common
stock, $.01 par value ("Common Stock"), of the Company, or approximately 62% of
the outstanding Common Stock, for approximately $250 million. On November 4,
1998, the agreement between the Company and the Purchaser was amended and
restated (as so amended and restated, the "Amended Agreement"). The Amended
Agreement provided for a single-stage transaction rather than the two-stage
transaction as proposed in the Original Agreement. On December 4, 1998, the
shareholders of the Company approved the issuance of shares of Common Stock to
the Purchaser under the terms of the Amended Agreement.
On December 11, 1998, the Purchaser informed the Company that it was
not willing to close the Amended Agreement. By letter dated December 18, 1998,
the Purchaser formally terminated the Amended Agreement, subject to the
Company's right to cure, but stated that it would be willing to negotiate a new
agreement. The cure period (which is provided for in the Amended Agreement)
expired on January 7, 1999.
Throughout this period and continuing until February 11, 1999, the
Purchaser and the Company negotiated the terms for a new transaction whereby the
Purchaser would acquire 62,500,000 shares of Common Stock, or approximately 71%
of the outstanding Common Stock, for $250 million. After working through all of
the issues related to such terms with all of the interested parties, the
Purchaser informed the Company on the evening of February 11, 1999, that it was
no longer interested in the investment and that it would not enter into the
newly negotiated agreement with the Company.
A press release of the Company dated February 12, 1999, describing this
situation is attached hereto as Exhibit 99.1.
FINANCIAL ADVISORY AGREEMENT. In conjunction with the Original
Agreement, on August 21, 1998, the Company and Hicks, Muse & Co. Partners, L.P.,
a Texas limited partnership ("HMCo"), entered into a Financial Advisory
Agreement. In conjunction with the Amended Agreement, on November 4, 1998, the
Financial Advisory Agreement was amended and restated (as so amended and
restated, the "Amended Financial Advisory Agreement"). Under the terms of the
Amended Financial Advisory Agreement, the Company paid HMCo $1,250,000.00 as
compensation for HMCo's services as a financial advisor to the Company and its
subsidiaries in connection with the Original Agreement and the Amended
Agreement.
The Amended Financial Advisory Agreement further provides for the
Company to pay HMCo a cash fee of $8,750,000.00 as of the closing date for the
transactions contemplated by the Amended Agreement if the shareholders of the
Company approved the transactions contemplated by the Amended Agreement on or
before December 31, 1998. The shareholders of the Company approved the
transactions contemplated in the Amended Agreement on December 4, 1998. Since
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the Amended Agreement has been terminated (as more fully discussed above), the
closing date of the transactions contemplated in the Amended Agreement has not
occurred and will not occur. As a result, the Company is under no obligation
to pay HMCo any additional fees under this provision of the Amended Financial
Advisory Agreement.
The Amended Financial Advisory Agreement further provided that,
effective as of the closing of the transactions contemplated by the Amended
Agreement, the Company would retain HMCo for financial advisory, investment
banking and other similar services in connection with certain Additional
Transactions (as defined in the Amended Financial Advisory Agreement). Because
the Amended Agreement has been terminated (as more fully discussed above), the
closing of the transactions contemplated by the Amended Agreement has not
occurred and will not occur. As a result, the Company is under no obligation
to engage HMCo for any financial advisory, investment banking or any other
service, nor is the Company under any obligation to pay HMCo any fees in
connection with any Additional Transaction (as defined in the Amended Financial
Advisory Agreement) or any other transaction.
OTHER AGREEMENTS. Because the Amended Agreement was terminated, the
Company has no obligation to enter into the Monitoring and Oversight Agreement,
the Amended and Restated Shareholder Agreement or the Indemnification Agreements
as contemplated by the Amended Agreement.
The Shareholder Agreement dated May 12, 1998 (the "Shareholder
Agreement"), between the Company and Energy Investment Partnership No. 1, a
Texas general partnership ("EIP"), remains in effect. The Shareholder Agreement
permits EIP to designate two members of the Company's current eight-member Board
of Directors.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS
(99.1) Company Press Release dated February 12, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COHO ENERGY, INC.
Date: March 4, 1999 By: /s/ ANNE MARIE O'GORMAN
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Anne Marie O'Gorman
Senior Vice President and
Corporate Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
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<S> <C>
(99.1) Coho Energy, Inc. Press Release dated February 12,
1999 (filed herewith).
</TABLE>
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EXHIBIT 99.1
COHO UNABLE TO REACH AGREEMENT WITH HICKS MUSE
DALLAS--(BUSINESS WIRE)--Feb. 12, 1999--Coho Energy, Inc., (Nasdaq: COHO - news)
announced today that it has been unable to reach an agreement for a restructure
of its original contract with Hicks, Muse, Tate & Furst ("Hicks Muse")
providing for the Company's issuance of $250 million of equity.
Last December, Hicks Muse had informed the Company that it was not willing to
close the Company's original agreement, but that it would be willing to
restructure the transaction such that the share price would be $4 per share
rather than the $6 per share as had been approved by the shareholders in
December. The Company has been working with Hicks Muse to reach a new agreement
since Dec. 11 and after working through all of the issues with all of the
interested parties related to such a change and negotiating an agreement which
was expected to be signed this week, Hicks Muse has informed the Company that
it is no longer interested in the investment and it would not honor its
commitment to the Company.
In light of the foregoing facts, the Company is continuing to consider all of
its options. The Company expects any such options would need to include an
arrangement with the Company's lenders under the Company's existing credit
arrangements but there can be no assurance that any such agreement can be
reached.
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Contact:
Coho Energy, Inc., Dallas
Jeffrey Clarke/Anne Marie O'Gorman, 972/774-8300
